A company that bid on a contract to oversee $16.7 billion in USVI hurricane recovery projects has filed suit in V.I. Superior Court, claiming the Public Finance Authority and Office of Disaster Recovery violated federal procurement regulations and conflict of interest rules after the job went to a firm whose bid was a "staggering" $107 million higher.
Hill International is seeking a temporary restraining order to stay the three-year contract that was awarded to CM2H for $137 million until the court rules on its request for a preliminary injunction to prevent the firm from commencing work until the matter is settled.
According to the complaint, the enormous disparity between Hill's bid of just over $30 million and CH2M's of $137 million "is so great as to make the award to CH2M arbitrary and capricious," especially since the Evaluation Committee scored Hill highest of all as to "cost effectiveness" and second-highest overall of the nine participating bidders.
Moreover, three of the five Evaluation Committee members -- Tawana Nicholas, Derek Gabriel and Jomo McClean -- are employees of the Public Works Department where two members of CH2M's parent company, Jacobs Solutions, also work, creating "an impermissible conflict of interest," the complaint states.
Additionally, the Request for Proposal stated that a minimum of two contractors would be selected for the job, it said. The scope of work included project and construction management for the rebuilding of schools, office buildings, roads, drainage systems, essential services facilities, health care centers and clinics and other infrastructure over a period of several years.
However, the PFA notified Hill International in a letter Aug. 15 that CH2M was the winning bidder and had been awarded a single contract for both project and construction management services, but did not offer any explanation why, the complaint states. The next day, Hill requested a debrief meeting to learn why it was not selected for at least one of the contracts.
A virtual meeting was convened on Aug. 30 where ODR Director Adrienne Williams-Octalien declined to answer questions about the single contract award and "incongruously said that CH2M's proposal represented the 'best value'," despite being higher than Hill's bid "by the staggering sum" of $107 million, the complaint states. Questions about Hill's scoring in the Evaluation Report went unanswered on the advice of the PFA's attorney Kye Walker, it said.
The firm filed suit Tuesday after it exhausted efforts to further discuss the matter with Williams-Octalien, according to the complaint, which also questions why the PFA and ODR awarded such a major contract when that authority belongs exclusively to the Department of Property and Procurement under V.I. Code.
"My client isn't interested in blaming anybody or pointing fingers. That's not the impetus. The goal is, just from a business standpoint, they submitted a bid they thought was a great winning bid, according to all the terms of the RFP, and then they lost for reasons that are opaque, to say the least," said Hill's attorney, Alex Moskowitz of Dudley Newman Feuerzeig, when contacted for comment on Thursday.
"They were the second-winning bidder and they were considered to be well situated to handle the work in a competent and qualified manner," so they would welcome the bid being awarded, he said.
"Based on the evaluation reports, they were right there neck-and-neck with the winning bid, the only difference being $107 million. We just don't know what it goes to," said Moskowitz.
Moreover, "of the final four bidders, the only one that was so exponentially higher than the rest was the winning bid. Everybody else was in the $30 to $40 million range. The bids are sealed ... but that's what we've been told. That's the overriding question: How did a bid that was so monstrously above the rest of them get approved for the same scope of work?" said Moskowitz.
If there is a difference in the scope of work, the government would have to issue a new RFP, he said.
"At the end of the day what we are hoping for is transparency," he said. "As Virgin Islanders we need that. We need our government to be transparent in its contracting. That's critically important to ensuring that the $16.7 billion in reconstruction money gets spent appropriately, for the benefit of Virgin Islanders," he said.
In a statement issued Thursday evening, Williams-Octalien defended the contract.
"The Virgin Islands Office of Disaster Recovery (ODR) complied with all applicable procurement rules in the evaluation of the proposals submitted in response to RFP-001-2024-STX/STT/STJ. The solicitation was for the project and construction management services of a portfolio of disaster recovery projects that is estimated to cost at least $8 billion. After a thorough evaluation, the Office of Disaster Recovery selected the respondent who demonstrated the greatest ability to manage the portfolio projects thereby bringing about the best value to the Territory," she said.
Further, Williams-Octalien explained the vetting process and award terms in an article published Aug. 16 in the Daily News, the statement said. The evaluation committee reviewed 10 proposals, one of which was disqualified, and shortlisted five contractors who made presentations, and settled on CH2M. The contract cost is about 5% of the overall $8 billion worth of projects to be managed, which is the industry standard, it said. Contract terms also include payment upon completed task orders within the not-to-exceed amount of $137 million as opposed to general lump sum payments, thereby guaranteeing payment for actual services performed only, according to the statement.
"The ODR will release a more comprehensive statement at the appropriate time. The Virgin Islands Office of Disaster Recovery remains committed to supporting the residents of the Virgin Islands through recovery and reconstruction efforts, ensuring a resilient and sustainable future for the Territory," it concluded.
The money for the territory's reconstruction is mostly a mix of Federal Emergency Management Agency grants and Community Development Block Grants administered by the Department of Housing and Urban Development.
In his State of the Territory address in January, Gov. Albert Bryan Jr. announced the Rebuild USVI initiative to expedite the recovery from the 2017 hurricanes by consolidating reconstruction projects under a "Super Project Management Office."
The strategy had three major goals, he said: To attract large general contractors to help secure the performance bonds on projects worth hundreds of millions of dollars; systemically resolve logistical challenges and supply chain issues that drive up project costs, discourage contractor interests, and slow recovery efforts; and solidify manpower and capacity issues.
"Rebuild USVI supercharges the territory's disaster recovery to think outside the box and dispense with the bureaucracy that is simply inadequate for our progress. The success of this initiative will allow us to launch several of our largest recovery projects simultaneously and create an ecosystem of economic activity from the resulting construction boom. This is the way we facilitate the transformation of a resilient Virgin Islands," Bryan said at the time.
However, Hill's lawsuit is just the latest litigation to arise from the questionable award of large government contracts.
In June, Education Department Director of Maintenance Davidson Charlemagne, his wife, Sasha Charlemagne, and V.I. Housing Finance Authority Chief Operating Officer Darin Richardson were arrested in connection with a $4 million VIHFA contract for the storage of wood that was shipped to the territory for the reconstruction of commercial and residential buildings following the 2017 hurricanes. All three have denied wrongdoing.
The same month, Police Chief Ray Martinez and Office of Management and Budget Director Jenifer O'Neal resigned after the FBI announced it was investigating a contract between the Virgin Islands Police Department and Mon Ethos Pro Support, a cybersecurity company operated at the time by David Whitaker, a convicted felon with a long history of fraud.
On Thursday, Whitaker admitted to two counts of wire fraud and one count of bribery concerning programs receiving federal funds in a plea deal with prosecutors unsealed on Thursday in V.I. District Court.
Public spending records reveal that the V.I. government paid $3.31 million to Mon Ethos since August 2022, including $1.7 million from the Office of Management and Budget and $1.5 million from the Virgin Islands Police Department.
A central concern is whether there was any personal gain for public officials connected to the contract, financed in part with federal relief funds allocated by the American Rescue Plan Act.
Hill's lawsuit also notes that "VIPFA's improper procurement practices, including conflict of interest transactions, waste/misuse of funds, and failure to establish procurement rules have been the subject of outside scrutiny since 2002 when they were audited and then audited again in 2017 by the US Office of the Inspector General, Department of the Interior."
The 2017 report found a litany of shortcomings at the agency, which the IG's office said placed millions of dollars at risk for fraud, waste and mismanagement.